FirstRand share price: strong financial performance in 2024 despite economic challenges

Key Takeaways

1. Resilient Earnings Growth: FirstRand Group reported a 4% increase in normalised earnings, rising to R37,988 million, reflecting the group's ability to thrive despite challenging macroeconomic conditions.
2. Impressive Return on Equity: The group's Return on Equity (ROE) reached 20.1%, showcasing robust profitability and effective use of equity.
3. Dividend Increase: An 8% rise in dividends per share highlights FirstRand's strong operational performance and commitment to delivering value to shareholders.
4. Strategic and Geographical Diversification: Significant contributions from diverse operations bolstered overall performance. FNB's broader Africa operations saw a 20% PBT growth, RMB's broader Africa operations increased PBT by 16%, and UK operations achieved an 18% PBT growth.
5. Effective Risk Management: FirstRand efficiently managed a R3.0 billion provision for the UK motor commission review while maintaining a strong capital base with a Common Equity Tier 1 (CET1) ratio of 13.5%. This strong capital foundation allowed for the 8% dividend increase to 415 cents.

FirstRand has announced impressive financial results for the fiscal year ending June 30, 2024. Despite facing challenging macroeconomic conditions, the group demonstrated remarkable resilience and growth across its operations.

Key Financial Highlights

• Normalised Earnings: Up 4% to R37,988 million
• Return on Equity (ROE): Achieved 20.1%
• Dividend Growth: 8% increase in dividends per share
• Headline Earnings: Rose 4% to R38,054 million
• Net Asset Value per Share: Increased 8% to 3,488.1 cents
• Credit Loss Ratio: Maintained at 0.81%

Strategic Diversification Drives Growth

FirstRand's success can be attributed to its strategic and geographical diversification:

1. FNB's Broader Africa Operations: 20% growth in profit before tax (PBT)
2. RMB's Broader Africa Operations: 16% increase in PBT
3. UK Operations: 18% growth in PBT

Effective Risk Management and Capital Strength

• Handled R3.0 billion provision for UK motor commission review
• Maintained strong capital base with Common Equity Tier 1 (CET1) ratio of 13.5%
• Increased total dividend by 8% to 415 cents

In summary:

FirstRand Group's 2024 financial performance showcases its ability to navigate challenging economic conditions through strategic diversification, effective risk management, and a focus on operational efficiency. With a strong capital base and continued growth across key metrics, FirstRand is well-positioned for future success in the financial services sector.

FirstRand Ltd – technical analysis

The share price of FirstRand looks to have started a pullback from new high territory. The long-term trend does however remain up, suggesting that traders might prefer to keep a long bias to positions.

New opportunities to join the upward trend might be considered on a bullish price reversal closer to either the 82.15 or 77.25 levels. In this scenario, overhead resistance at 95.00 becomes a longer-term upside target, while a close below the reversal low might be used as a stop loss consideration.